Treasury's Lew in China to talk currency, cybersecurity

Mar. 19, 2013
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Treasury Secretary Jack Lew. / Mandel Ngan, AFP/Getty Images

by Calum MacLeod, USA TODAY

by Calum MacLeod, USA TODAY

BEIJING - Touting the usual long list of U.S. complaints about Chinese practices, plus fresher worries over cybersecurity, U.S. Treasury Secretary Jack Lew began two days of talks in Beijing on Tuesday with China's newly installed leaders and ministers.

As ties between the world's two largest economies expand in size and complexity, familiar problems from Washington's perspective remain China's huge trade surplus with the U.S., state manipulation of its yuan currency, counterfeiting of U.S. goods, and market access barriers for U.S. companies in China.

The Treasury Department said Lew, sworn in last month, would also discuss Chinese hacking against U.S. companies and organizations. President Obama's national security adviser, Tom Donilon, last week called on Beijing to crack down on cybertheft from American businesses.

Lew's visit, and reception by China's top leaders, represents a resumption of U.S. high-level visits after a six-month hiatus caused by the leadership transition of China's ruling Communist Party. Now that the process is complete, following party chief Xi Jinping's appointment as president last week, U.S. Secretary of State John Kerry is expected to visit next month, followed by Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff.

"In the China-U.S. relationship, we have enormous shared interests, but of course, unavoidably, we have some differences," said Xi ahead of a meeting with Lew in Beijing's Great Hall of the People. "We stand ready to work with the U.S. side to continue to develop this China-U.S. cooperative partnership."

Their 45-minute discussion, Xi's first meeting as president with a foreign visitor, covered "the exchange rate, intellectual property, cybersecurity and North Korea," the Treasury Department said in an e-mailed statement. Lew was "candid and direct" and "emphasized the need to continue to strive for a relationship of healthy competition rather than strategic rivalry," said the statement.

Xi's first overseas trip as president, later this week, will be to Russia, another important partner, but the relationship with the USA remains "the keystone of Chinese foreign policy," said Sun Zhe, director of the Center for Sino-U.S. Relations at Beijing's Qinghua University. In Xi, who sent his daughter to study at Harvard, China has a leader well-disposed toward the U.S., he said.

Lew's trip is unlikely to produce dramatic results, said Sun, as shown by Xi's comment that both sides should approach relations "from a strategic and long-term perspective." But China is learning from the U.S. to be more pragmatic and issue-focused, he said. When Washington applies pressure, "it's like using toothpaste, you just get one drop at a time" in terms of Chinese results, but the U.S. should still recognize Chinese progress on issues such as intellectual property rights and environmental protection, said Sun.

Chinese state media offered Lew advice Tuesday. The trip is a major test for an official lacking the international experience of predecessors Timothy Geithner and Henry Paulson, warned the Economic Observer newspaper. On yuan appreciation, "China has its own opinion, and won't care about pressure," it said, advising Lew to listen patiently to China's voice, as the bilateral economic relationship is more equal than in the past. A commentary from state news agency Xinhua said Lew must persuade Beijing that Washington can solve its debt problems.

"The two sides would prefer to build a friendly relationship from the beginning, and no party wants conflicts at this stage," Zha Xiaogang, a researcher with the Shanghai Institute for International Studies, told the Global Times newspaper. "So they will tone down the disputes in public, though each will stick to its bottom line behind closed doors."

While Lew had no open press or public events Tuesday, he made at least one fan among the Chinese public. "He's friendly and handsome," said waitress Yue Jiao, after Lew and three colleagues enjoyed a simple lunch of vegetable dumplings Tuesday at the Baoyuan Dumpling House near the American Embassy. "I wish our two countries could be genuine friends, not rivals," said Yue, 21. "Our problems can be solved if we have more communication like this and try to be friends."

Chinese Internet users were more interested in the cost of the lunch - $17.50 - and contrasted Lew's frugality with the corrupt, banqueting lifestyle of Chinese officials that Xi has vowed to curb.

In grander surroundings, Lew was scheduled to have a working dinner Tuesday with newly appointed Chinese Finance Minister Lou Jiwei. In an interview with Reuters last November, Lou said that China had accomplished its easier reforms, leaving harder ones, including greater freedom of movement and convertibility for China's currency. Lew's visit ends Wednesday, when he will meet China's new premier, Li Keqiang.